However, according to the infectious disease specialist, vaccination is of great important strategy in the fight against coronavirus pandemic.
By Thanh An – Translated by Anh Quan
However, according to the infectious disease specialist, vaccination is of great important strategy in the fight against coronavirus pandemic.
By Thanh An – Translated by Anh Quan
The move followed the infections related to a Japanese man who tested positive for Covid-19 after he had died at a local hotel.
The city has also closed all local historical relics from 0:00 on February 16, said Vice Chairman of the Hanoi People’s Committee and head of the municipal Steering Committee on Covid-19 Prevention and Control Chu Xuan Dung.
The 54-year-old Japanese patient, an expert of Mitsui Vietnam Co., Ltd, entered Vietnam on January 17 via Tan Son Nhat International Airport in Ho Chi Minh City. After two tests which showed negative results, on February 1, he flew to Hanoi and stayed at the Somerset Westpoint Hotel.
Around 7pm on February 13, he was found dead in his hotel room. His sample tested positive for the novel coronavirus SARS-CoV-2 on February 14. The cause of his death is under investigation.
Two people who had come into close contact with him have also tested positive for the virus. One is a Japanese 43-year-old man and the other is a woman in Hanoi.
Dung cited the Hanoi Centre for Disease Control as saying that the city is facing the high risk of Covid-19 infection related to the 54-year-old Japanese patient.
Concerned agencies in Hanoi are working urgently and drastically to screen F1 and F2 cases of him, he said.
Nguyen Khac Hien, director of the Hanoi Department of Health, said many people still do not wear a face mask in public places. Meanwhile, people gather in crowds. He urged for stricter punishment for those violating guidance.
At 5 a.m. farmers start heading to nearby Kim and Chu towns to sell their lychee. They have to cross the Tong Lenh pontoon bridge across the Luc Nam River on their motorbikes. This is the only bridge connecting them with Luc Ngan District, Bac Giang’s main lychee growing area with 15,000 hectares. On days when the water is low, it is not too difficult to traverse, but when it is high, the pontoon begins to sway, and falling into the river is all too easy.
The bridge is only wide enough to fit two motorbikes, and since there is always traffic, drivers have to navigate carefully past vehicles coming in the opposite direction. The work is usually only done by men since it often requires manhandling and balancing motorbikes with baskets with nearly 200 kg of lychees.
Giap Van Tu, 45, of Truong Giang Commune says: “Locals call this the bridge of death. But there is no other way since if you want to sell lychees at a good price, you have to cross this bridge.”
Thousands of motorbikes cross this bridge daily during the lychee season. Though many are rushing to sell, everyone lines up in orderly fashion when it comes to crossing the bridge since a small mistake means all their hard labor over months will be in vain.
People rush to help a man whose vehicle has tipped over. Though the fruits were saved in time, they were bruised and damaged, making it difficult to sell them.
Lychees can be seen scattered and crushed on the bridge, the result of many unfortunate mishaps.
After crossing the bridge, farmers have to drive up a vertical slope, another difficult task.
During the lychee harvest season, the youth unions of Luc Nam District and Truong Giang Commune dispatch members to help farmers go up the steep slope. There are at least 10 volunteers’ station around the bridge at 5 a.m. to give a hand.
Bac Giang is in the early period of the lychee harvest season. The price depends on the freshness and is VND15,000-18,000 ($0.65-0.78) per kilogram.
In order to avoid the price squeezing and promote fair trade at the lychee purchasing points, the people’s committee of Luc Ngan District has put up a board with the phone numbers of the local authorities so farmers can contact if needed.
|By Ta Hong Thai – Partner, head of Corporate Tax KPMG Vietnam|
The prime minister’s view is not just his desire as the leader of the government but is also an expectation of enterprises when almost all of us feel disappointment after a statement was made elsewhere that Vietnamese enterprises “are not competent enough to produce screws”.
The Ministry of Science and Technology (MoST) has proposed several initiatives aiming to improve the legal system in terms of mechanisms and policies for promoting science and technology activities and innovation, including investment regulations, public investment, state budget, and tax regulations.
Specifically, it requested to make the Science and Technology Development Fund an obstacle-free source of capital towards investment in innovation in technology. It is requested that the Ministry of Finance (MoF) promptly amend the joint Circular No.12/2016/TTLT-BKH&CNBTC guiding on the spending content and management of the fund.
Many enterprises have not been aware of the fund nor understand its benefits. In a way, the attempt to reach the businesses and bring these regulations into force have not been very effective.
The Law on Science and Technology was passed in Vietnam in 2000. It is a set of codes that specify the state’s policies to ensure that science and technology development constitutes a primary national policy.
The state encourages the establishment of such a fund on a national, local, and organisational scale. At the same time, the state commits to provide tax incentives in accordance with the regulations to enterprises that engage in the innovation and improvement of technologies. Therefore, businesses can benefit from tax incentives when participating in the activities of technology innovation and enhancement through the science and technology development fund.
The spirit of the laws is clear, but what about the tax regulations? According to the Law on Corporate Income Tax (CIT), enterprises can provide up to 10 per cent of their annual income before tax to establish the science and technology fund.
With this provision, the CIT law provided further details to implement the Law on Science and Technology and allowed enterprises to spare their taxable incomes for establishing the fund, meaning the enterprises do not have to pay tax supposed to be levied on the amount spared for this fund. At prima facie, this regulation seems to give great benefit to enterprises when they do not have to pay CIT and enjoy the tax saving amount, but this is not actually the case.
The CIT law also stipulates that enterprises are not allowed to claim expenditures spent from their science and technology funds as deductible operating expenses when determining taxable incomes during the period that the expenses incurred.
The reality is that when the enterprise incurs technology research and development (R&D) expenses, and if the expenses are spent from the fund, these expenses are not considered as deductible when calculating CIT liability. The government’s encouragement seems to be a temporary deferral of tax when contributing to the fund, the enterprise will pay back tax to the government later by not claiming deductible expenses when they actually incur science and technology development expenses.
It seems illogical if an enterprise is enjoying incentives like tax exemptions and reductions as result from investment in industrial parks, economic zones, or funding in difficult areas or encouraged industries.
In addition, the CIT law also stipulates that within five years from the starting date of the fund, if an enterprise does not utilise it, utilise less than 70 per cent, or utilise it for inappropriate purposes, it will be subjected to the collection of CIT, which is calculated based on the actual amount contributed to the fund plus interests on such collected amount. Obviously, the time period for enterprises to enjoy the benefit of tax deferral as a cash advance for this fund is not much.
The MoF has issued very strict regulations on the use of the fund under joint Circular 12 regarding the organising, managing, registering, reporting, and other necessary internal procedures for project approval, expenses approval, and fund transferring to other affiliated enterprises. This could reasonably be a mandatory requirement applicable to state-owned enterprises while for the remaining private enterprises, it should not be acceptable as there are many complications hindering flexibility in using internal resources with the benefit are not clear and not significant, as mentioned above.
It is prominent that the incentive policies through the mechanism of setting up and using the fund is not appropriate or practical. Therefore, for many years, these policies have not been widely applied by enterprises.
Not only Vietnam, other countries also have strong focus on science and technology development and providing incentives for the R&D activities of enterprises.
Many governments encourage enterprises to invest in the R&D activities with a range of support, especially tax policies like tax credit mechanism, double expense deduction, or super tax deduction.
For the tax credit mechanism, if an enterprise incurs R&D expenses, this enterprise has the right to use a percentage of the expenses to directly offset against their payable tax amount when declaring annual tax.
In Taiwan, for example, businesses can deduct from 10-15 per cent of their total R&D expenses against their annual income tax payable amount, although the government restricts the deduction to be no more than 30 per cent of the tax payable in the year. However, this is the actual amount of funds that businesses can be subsidised by the state. Japan, South Korea, New Zealand, Australia, and many other markets also apply the same policy.
Malaysia allows a deduction up to 200 per cent, which means that for one dollar expense incurred, two dollars of taxable income will be deducted. The state then subsidises the tax amount associated with the additional deductible expenses. Singapore even gives a deduction for up to 250 per cent, and China 175 per cent.
Tax incentives are an effective instrument when one government implements policies to encourage science and technology development. In fact, the current tax laws have provided tax incentives for high-tech businesses, businesses applying high-tech, software manufacturing businesses, and supporting product manufacturing businesses, etc.
However, R&D costs are incurred at many different stages of different businesses at different scales, and more importantly, these costs are significantly important when reviewing the objective of the laws on science and technology which is to improve the national scientific and technological capability.
In Vietnam, the limited state budget makes it challenging to provide effective support as in other countries. Nonetheless, given the reality of practice that enterprises are not interested in the policies despite availability for many years, it is essential to review these policies and consider amendments.
The COVID-19 health crisis and resulting wide-ranging and deeply-felt economic upheaval has flipped the logistics industry on its head, leaving ill-protected freight firms in dire need of emergency State support to survive hardships.
Mandatory preventive measures among nations to contain the spread of the pandemic has resulted in disrupted trade flow and fragmented supply lines, dealing a blow to the logistics industry, which is viewed as an auxiliary for trade and commerce, enabling other industries to deliver goods and services to consumers.
Factories reducing production or suspending operations has led to a curtailment in the transportation and delivery of goods in the supply chain, greatly affecting the operation of logistics companies.
Shrinking orders, surging costs
“Right from the early stages of the COVID-19 outbreak, the number of freight orders received by logistics companies in Bac Ninh fell sharply, at the same time, the delivery of goods, storage and warehousing activity is slowed and disrupted,” Nguyen Hoai Nam, sales manager of Golden Logistic Co. Ltd. in the northern province of Bac Ninh, told Viet Nam News.
“Following government guidelines on COVID-19 prevention and control, we businesses are making a continuing effort to realise the dual goal of maintaining production while ensuring work-related safety during the pandemic, prioritising workers’ health,” he said.
Every stage involving transportation, warehousing, regular health check-ups for workers and drivers transporting goods in pandemic-hit areas was all in strict compliance with guidelines for disinfection and sterilisation. But this had resulted in a surge in operational costs.
Travel restrictions also led to worsening shortages of truck drivers to pick up containers, he said.
“Multiple unexpected costs have pressured logistics service providers. However, it is time both manufacturing enterprises and logistics enterprises need to work together,” Nam said.
Logistics costs in Viet Nam account for about 20 per cent of the goods value, which is relatively high compared to the average costs over the world.
“However, devastating consequences caused by the prolonged pandemic, together with the rising prices of warehousing and freight services, makes logistics costs continue to increase, putting great pressure on businesses,” Nam said.
Businesses also faced a significant reduction in revenue from goods exported and imported from pandemic-affected countries. Commodities shipped to Viet Nam dropped dramatically, those undergoing customs clearance were strictly quarantined. Delivery times from suppliers in the Asian market and some other regions is reportedly longer.
According to statistics of the Viet Nam Logistics Business Association, up to 50 per cent of enterprises providing logistics services of all types experienced a downturn in activities and revenue. Air and road transportation services were hit the hardest.
Roughly 80 per cent of the association’s members are micro, small and medium enterprises, thus many of them are on the brink of collapse, meaning workers are losing their jobs.
In Viet Nam, infection cases were detected at large-scale industrial parks of Bac Ninh and Bac Giang, causing many disturbances in the production lines of enterprises, which inevitably placed a direct impact on logistics enterprises.
Tax payment postponement
A report summarising recommendations of businesses and associations in April-May 2021 has been submitted to the Prime Minister by the Private Sector Development Research Board (Board IV), under the government’s Advisory Council for Administrative Procedure Reform and Young Presidents’ Organisation (YPO).
In the report, Board IV said amid the pandemic, manufacturing enterprises in industrial parks, logistics and transportation businesses suffered, causing economic hardship and supply chain disruption.
Exporting enterprises confronted great challenges due to worsening shortages of containers and merchant ships on a global scale, as well as skyrocketing fees.
Board IV, therefore, recommended the Government consider and direct ministries, branches and localities to simplify administrative processes or consider according to priority for import and export processes, as in the priority just applied to the export of Bac Giang lychee.
This would help businesses optimise time and costs in the domestic stages to speed up the import procedures for essential goods or accelerate the export of agricultural products and other key export commodities.
Le Duy Hiep, Chairman of the Viet Nam Logistics Service Association (VLA), said in light of COVID-19 developments, in order to support logistics businesses, VLA proposed the Government grant a reduction of 50 per cent on corporate income tax for 2020 as a way to support businesses to overcome hardships.
It also proposed the extension and postponement for employers’ tax payment, their contributions to the Social Insurance Fund, Unemployment Insurance and Health Insurance Fund, Hiep told Viet Nam News.
VLA’s recommendations on tax payment extension have been approved by the Government. However, “this takes time and many procedures are required by the banks,” Hiep said.
Decisions on petrol retail price reduction benefited both businesses and the whole economy, he said.
The Viet Nam Maritime Administration in May last year decided to reduce the pilotage fee by 10 per cent for Vietnamese shipping enterprises operating on domestic routes, as a support measure amid the COVID-19 pandemic.
Hiep said Viet Nam’s logistics costs were still higher than the regional and global averages of 16-20 per cent.
“We are trying to reduce the cost to equal other countries in the region, such as Thailand at 14-15 per cent and Singapore at 8-10 per cent,” Hiep told Viet Nam News.
The government targets that by 2025, the contribution of logistics services to Viet Nam’s GDP will touch 5-6 per cent, with the growth rate of logistics industry reaching 15-20 per cent, the rate of outsourced logistics services at 50-60 per cent, achieving Global Logistics Performance Index at 50 or higher.
Logistics enterprises should urgently apply IT solutions, modernising management and operation methods, use software systems and logistics optimisation platforms to cut costs and improve service quality, Hiep said.
They should promote linkages with other logistics providers and with manufacturing enterprises in order to create competitive advantages in negotiation and improve service provision capacity, Hiep said.
VLA would actively co-ordinate with localities and manufacturing companies to devise solutions promoting the transportation and circulation of goods, ensuring safety amid the pandemic, at the same time applying supportive measures such as reducing freight, storage and warehousing costs.
Trade centres and supermarkets should consider augmenting the purchase of agricultural products from farmers in pandemic-hit localities such as Bac Giang, he said. — VNS
At FPT Digital Retail Joint Stock Company’s annual general meeting recently, shareholders gave the green light for plans to diversify from core businesses and enter some new product categories.
This is not the first time the company is eyeing new products.
In the first quarter of this year the company reported sales of VND4.67 trillion(over US$203 million), a year-on-year increase of 14 per cent.
An FPT spokesperson told Dau Tu Chung Khoan newspaper that the company’s two retail chains, FPTShop and F-Studio by FPT, which sell digital products such as mobile phones, tablets and laptops, were still the main revenue spinners but non-core businesses also brought significant revenues.
The Long Chau Pharmacy Store chain for instance is expected to report sales of VND582 billion (over $25.3 million) in the period, up 144 per cent. Its consolidated profit before tax was up 265 per cent to VND39 billion ($1.7 million).
Last December MobiFone and FPT Retail signed a deal to sell co-branded sim cards at FPT Shop nationwide. Customers who buy MobiFone-FPT Shop sims get special deals when shopping at FPT Shop.
The positive results from such non-core businesses have encouraged FPT Retail to consider entering more new product categories.
In April FPT Shop began selling Xiaomi’s IoT household appliances, and, together with Garmin, opened the first Garmin Brand Store in Ha Noi, the first in Viet Nam.
With the new product categories lending a hand, FRT expects to generate sales of VND 6.4 trillion ($713 million) in 2021 and pre-tax profits of VND120 billion representing year-on-year increases of 12 per cent and 320 per cent.
Similarly, non-core products have also made an important contribution to electronics retail giant Mobile World Joint Stock Company (MWG)’s turnover.
In the first three months of this year its consolidated net revenues were VND30.83 trillion, up 5 per cent from the same period last year, and after-tax profit was VND1.34 trillion, up 18 per cent.
But interestingly its food and grocery chain, Bachhoaxanh, was a leading contributor, with 19.3 per cent of MWG’s revenues after registering 32 per cent growth. Its core business, the Thegioididong chain, accounted for only 26.8 per cent of revenues after they fell by 1 per cent.
Bachhoaxanh’s gross profit margin in March stood at 25 per cent, and it is expected to go up thanks to adding several new food products and fast moving consumer goods to its line-up.
A company spokesperson said the effort was always to diversify the mobile phones and electrical and electronic devices sold to give customers more options. But the company would also focus on further developing the new product and fast moving consumer goods categories to tap a promising market of $60 billion, much higher than the phone and electronic devices market which is only worth $10 billion.
DigiWord Corporation (DGW) recently floated plans for entering the medical and cosmetics retail market at its AGM. A company executive, Lu Tran Anh Dung, admitted to Investment and Securities magazine however that DGW only wanted its shareholders to apply their minds to the proposal at this time so that it could move rapidly if any opportunities come in future.
DGW also expected to enter other new product categories in the coming years, he said.
It already had a strategic partnership with Nestle to sell the latter’s nutrition products through its distribution channels. This fetched DGW revenues of VND81 billion in the first quarter of this year, a year-on-year increase of 29 per cent.
DGW also owns a 21.86 per cent stake in pawn chain operator Vietmoney.
Analysts said technology retailers had managed to sustain growth though the market had gradually become saturated because they had shown the flexibility to enter other businesses.
Raw material prices rise across the board, hit bottom lines
Since May 2020, when they bottomed out, the prices of PVC resins have been increasing relentlessly due to a supply shortage and rising logistics costs.
According to Viet Dragon Securities Joint Stock Company, they topped their historic high of $1,216 per tonne reached in February 2018 to reach $1,400 in March this year.
The prices of petrochemical products including PVC resins have increased by 26 per cent this year, while oil prices are up 19 per cent.
Market observers attributed the drastic price hikes to a global supply disruption caused by the pandemic and power shortages in the US that caused refineries to stop production.
A spokesperson for Binh Minh Plastics Joint Stock Company (BMP) said the sharp rise in the prices of PVC resins had badly hit the company’s profits.
So, though the company hiked the prices of its plastic products twice by a total of around 14 per cent since February this year, its gross profit margin decreased to 17.9 per cent in the first quarter compared to 24.1 per cent a year earlier, the lowest rate since 2006.
A similar situation also plagues businesses in other sectors.
Seafood company Vinh Hoan Joint Stock Company saw its profit margin decline within a year from 14.4 per cent to 7.5 per cent.
For Minh Phu Seafood Joint Stock Company, it went down from 3.6 per cent to 0.8 per cent and for Sao Ta Food Joint Stock Company, from 6.4 per cent to 3 per cent.
The Dry Cell & Storage Battery Joint Stock Company (PINACO) saw the margin fall from 15 per cent to 14.2 per cent between October 2020 and March due to a sharp increase in the price of two main raw materials the company uses, zinc and lead, according to a spokesperson.
The Mercantile Exchange of Viet Nam reported that on May 12 the prices of several metals increased, zinc by 0.1 per cent to $2,995.50 per tonne and lead by 0.2 per cent to $2,217.50.
Ngo Tri Long, former rector of the Ministry of Finance’s Price and Market Research Institute, said the prices of materials used in industrial production and construction such as plastic, steel, bricks and sand are up 20 per cent this year.
Steel, which accounts for around 20 per cent of the cost of a building, increased by 40 per cent.
Le Nhu Thuy My, director of the Nhan Quoc Ceramic Tiles Company in Dong Nai Province, said there had been a slight increase in the prices of ceramic tiles due to a rise in packaging, fuel and transportation costs.
According to the General Statistics Office, in the first four months of this year the prices of raw materials used in industrial production have increased by 4.64 per cent year-on-year.
The price of raw materials and fuel used for agriculture, forestry and fisheries increased by 6.77 per cent, while those used in industrial production increased by 4.95 per cent.
How have businesses reacted to their rising costs?
Vinamilk has decided to increase prices.
KIDO Group Joint Stock Company, one of the country’s leading food processors spends 60 per cent of production costs on soybean oil and palm oil, whose prices have increased by 67 per cent and 76 per cent since last year.
The company could pass on the costs to its suppliers since it dominates the niche market for vegetable oils, an industry insider said.
But it would also probably increase prices by around 12 per cent, he added.
Analysts said however it was not easy for most companies to hike prices due to the COVID-19 pandemic, which had badly hit the incomes of both corporate and individual customers.
The Tien Phong Plastic Joint Stock Company (NTP) decided to increase its inventories of raw materials until the market calms down.
This way, it had managed to overcome the worst effects of the raw material price hikes, a company spokesperson said. VNS